Traditional finance firms are about to be slammed by a 'perfect storm'

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Traditional finance firms are about to be slammed by a “perfect storm” (FA Magazine)

“A perfect storm of technology, regulation and demographic changes is dramatically changing the value proposition traditional financial firms provide,” reports Karen Demasters, citing Michael Foy, the director of wealth management practice at J. D. Power.

“The convergence of self-directed and full-service models produces both significant opportunities and threats to established firms in this space,” Foy said. “The emergence of robo-advisors, the new Department of Labour’s fiduciary standard and demographic changes such as the rise of the millennial generation is dramatically changing the value proposition traditional firms provide.”

Financing college isn’t just a savings problem — it’s a retirement problem (Advisor Perspectives)

“Although saving for college is a top investment goal for many, it does not occur in isolation; financial goals are often intertwined. As such, financing education frequently has a direct and potentially negative effect on retirement,” writes Roger Michaud of Franklin Templeton Investments.

“If parents reallocate their savings from retirement to education, they are faced with the prospect of being unable to retire as planned due to a lack of savings. As a result, they often have to make the hard choice to retire later, or to retire as planned but with less money and perhaps a lower standard of living,” he adds.

The bond market could be recreating the massacre of 1994 (Business Insider)

Deutsche Bank’s chief economist Torsten Sløk thinks investors could be setting up for a repeat of 1994’s bond-market chaos.

“My baseline scenario is that the market over the coming months will move up toward the Fed’s view of the outlook, and while there may be some bumps on the road, this is likely to be a smooth process,” he wrote in a note out Thursday, according to Business Insider’s Akin Oyedele.

“But the longer the market ignores the Fed, including the fact that the economy is soon at full employment and therefore closer to a broad-based uptrend in wages and inflation, the higher is the risk that we could see a move in bond markets similar to what we saw in 1994.”

Gold might be about to defy conventional wisdom (Business Insider)

In a Friday note to clients, Julian Jessop, head of commodities research at Capital Economics, reiterated his beliefs the Fed will hike rates twice in 2016 and that Fed rate hikes won’t derail gold’s rally.

“The conventional wisdom, of course, is that Fed tightening is bad for gold, mainly because higher US rates can strengthen the dollar and increase the opportunity cost of holding commodities. Prices have indeed faltered this week in the wake of the hawkish FOMC minutes,” he wrote.

“However, there is surely more to say than this; after all, gold and silver prices actually rallied in the weeks and months after the Fed first raised rates last December.”

RCS Capital has a bankruptcy plan confirmed (Financial Planning)

The bankruptcy plan for RCS Capital, the parent of Cetera Financial Group, has been confirmed by a federal judge, reports Ann Marsh. This opens the door for RCS to move out of Chapter 11 bankruptcy protection in the near-term.

The judge’s decision also “marks the beginning of the end of a nightmare for most of the 9,000 Cetera brokers who were snapped up in an acquisition spree over the past several years by RCS’ former executive chairman and nontraded REIT kingpin Nicholas Schorsch,” writes Marsh.

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